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Telcos are uniquely equipped to be the mainstay for the development, construction and implementation of smart cities, they are the prime candidates to play a service platform role, and develop access to the data and analytics underpinning all smart city services. Middle East telcos have been investing in their networks, and developing them for years, and many have well established fibre to the home (FTTH), small cell, and wifi hotspot initiatives. Still more are actively getting ready for 5G connectivity, which will revolutionise smart city connectivity. Since connectivity will be key to enabling the necessary applications, sensors, IoT devices and other elements of the smart city, these telecom operators have a head start to serve the needs of this new market reality.

“The majority of telcos are transforming their businesses into digital businesses, where software, data and analytics are key, which puts them at an advantage in the smart city space. For the most part, they also have a proven capability to manage complex partner ecosystems with a vendor-agnostic approach. For those telcos with strong presence in the Enterprise space, they also have a large commercial experience in the creation of corporate services and solutions (digital and others), which can be easily adapted for the smart city space," said Luis Cirne, partner in Telco Practice, global consulting experts, Oliver Wyman.

Most experts agree that 5G will be critical to handing the large volumes of data generated within a smart city. Here too, telecom operators, with their extensive experience, expertise in the domain, and financial and manpower resources are the most ideal candidates to deliver the networks needed for smart cities.

“It is agreed that the combination of IoT, cloud, communications and big data will accelerate adoption of the smart city concept. All these together if well instrumented and integrated will help in addressing the challenges of scarce resources, pollution, security, safer travel, and healthcare while offering a high growth environment for telcos,” said Charbel Khneisser, regional presales director, METNA at Riverbed.

Telecom operators will provide enabler infrastructure to build smart city services (the connectivity and bandwidth required to run services and applications). Some telcos, have moved up the smart city value chain to position themselves as solutions and services providers, offering consultancy, data analytics, AI, cognitive services, OMS platforms, integration and collaboration - community portals and mobile apps - for example. This has shifted the telco from commodity network connectivity provider to an added value, customer facing service provider in the context of the smart city.

“The scale of smart city developments here in the Gulf is one of the biggest challenges and makes the region unique. The vision, leadership and resources are all in place but these developments demand new business models and so require new thinking; it is not just a question of importing a model from elsewhere. Even finding the right partners who can match the vision, scale and speed of these projects is a challenge. Telecom operators can bring this new thinking and the capability required to deliver these ambitious programmes,” said Fadi Shanaah, business development director for Smart Cities, Middle East & Africa, Orange Business Services.

The term smart city is generally related to intelligent infrastructure, including digital sensors that can efficiently manage assets and resources and built in connectivity to the Internet of Things (IoT), smart cities have no formal definition and are still in the development phase.

“Operators should consider how wireline and wireless connectivity will enable smart cities to thrive. For example, fibre can help connect key institutions [schools, government buildings, hospitals, libraries, etc.] and provide a low risk way for public investment in connectivity, because excess fibre can be leased to internet service providers. 5G deployment will enable three use cases that will help drive smart cities: enhanced mobile broadband, massive machine type communications, and ultra-reliable low latency communications,” said Femi Oshiga, VP of Service Providers, MEA, CommScope.

Telcos have the opportunity to become the architects, aggregators, guardians and providers of data and analytics for the myriad services which will be built on the smart city data – in coordination with government agencies. The end-goal, according to Khneisser, should be for telcos to provide smart city as a service, a managed service based on multi-tenant open standard platforms where smart service providers (partners) can easily plug into and out of. In the spaces closer to their core, telcos can provide services to end-users directly (e.g. fleet management, smart video surveillance), but they should focus their efforts on becoming the best possible partner for other smart service providers.

Competition and hindrances

More than 20% of the world’s population lives in the Middle East and Africa, where mobile data traffic is expected to increase 12 times from 2015 to 2020. As the MEA region moves to a post-oil economy, the Middle East is investing heavily in fibre and wireless technologies for better network coverage, greater broadband access and increased capacity to meet consumer demands, according to CommScope.

“From mobile transactions to downloading heavy files, staying connected across multiple platforms is now an indispensable part of our life. In fact, with Dubai listed as one of the top smartest cities in the world for 2017, the demand for mobile connectivity and smart solutions will only get stronger,” said Oshiga. “As the Middle East invests in medical tourism, transportation, healthcare and government services for economic growth, mobile access and instant information will be more critical than ever.”

The smart city space is ripe for investment and development by telcos, and will provide a massive opportunity for investment and profit, but it is not all sunshine and roses, if operators are less agile and unable to innovate quickly, they may, quite simply be left behind.

“Some operators will struggle with adding new services as their existing networks are already stretched- this may be because their fixed-line services are either not fully developed or just overloaded. Shifting services to mobile networks could be a solution to this but with the expected volume, these too would soon be overwhelmed,” said Khneisser.

To combat this challenge would involve ramping up both the access and backhaul portions of the network. Thereafter, telcos would need to create IoT-ready networks as this will no doubt be key to realising the potential of smart cities, according to Riverbed.

Of course, this, in itself presents a business risk as it is possible that smart cities will take longer to develop than expected. The popular projection that IoT would reach 50 billion devices worldwide by 2020 was slashed significantly to 30 billion and even this appears to be an overestimation, according to Riverbed. Anticipating and making the necessary investments for such a boom, only to have the added capacity of the network underutilised could make it very difficult for telcos to achieve ROI.

Consultancy experts, Oliver Wyman, states that there are for main challenges facing telcos, in addition to the innovate or die challenge outlined by Riverbed.

First, smart cities require a complex interplay between telcos, other private entities and multiple government agencies. Typically you find many public agencies with responsibilities that touch the smart city space and with legitimate expectations to play a role. The governance of such environments is the key success factor. Without a clear vision and strong top-down enforcement, agents soon get bogged down in a maze of relationships which leads to slow progress and disgruntled stakeholders.

Secondly, there is limited availability of smart city expertise globally. One of the implications is that governments and telcos do not always have a counterpart who has been through smart city projects in the past.

This often complicates dialogue between agents, exacerbating the first challenge.

Thirdly, smart cities do not have a clear business case for telcos. While they require heavy investments in technology capex, people and management time, the upside is unclear. In many ways, it is a concept which in some regions is ahead of its time and requires a leap of faith to be made a priority for telcos. In many cases, it is not.

Fourth and finally, smart city projects are still often approached as another ‘big stack’ deployment project, in which the vendors familiar to the telcos are more than happy to provide proprietary solutions that solve a specific set of problems. But these boxed solutions end up missing the mark of what the market really wants and the change requests start piling up.

Telcos must invest now to secure ecosystem alignment and clarify the roles of all private and public agents, ideally before embarking on the smart city journey. If they are already in the storm, invest doubly to clarify governance.

“Telcos will be the main losers if the roles aren’t clear, either because they will have to over-invest to deliver on a moving target or they will deliver below expectations,” said Cirne.

Aligning KPIs with government agencies’ targets, defining stakeholder management strategies, and appointing a top management sponsor to coordinate with top government stakeholders are useful approaches to generating alignment. In addition, working closely with regulators is a must. A clear regulatory framework, which promotes public private partnerships, typically through revenue sharing schemes, will encourage telcos to invest, together with the various government agencies.

“While a clear top-down mandate is a great accelerator, there is also bottom-up work to be done. Internally, operators should create specific departments to ensure that not only there is focus on creating viable commercial offerings, but also that there is investment in early pilots with anchor clients. These will provide evidence to the smart city opportunity internally and will serve as great selling arguments for other external clients,” said Cirne.

Collaboration is key

Smart city development requires collaboration on a scale not seen before, across a range of verticals, regulators, governments, and systems integrators. All of these bodies need to work together to provide a comprehensive framework in which smart cities can successfully operate. Ultra-reliable low latency communications will provide critical connectivity for services such as vehicular communication, drone delivery, and virtual or augmented reality that require a consistent connection and near instant response times.

“In places like the United Arab Emirates (UAE), the government is reimagining what transportation and education will look like in the future. They’ve appointed the world’s first Minister for Artificial Intelligence and more than half a million people from 22 countries have applied to participate in the One Million Coders programme,” said Oshiga.

In ‘green field’ markets such as the Middle East, the public private partnership is a collaboration model in which government sets the clear vision and telcos provide the network backbone, whilst both government and private sector companies deliver the applications and services to the community. But, there are several models for telcos to consider, according to Orange Business Services: Firstly, monetising and extracting the value from the data aggregated through the smart city platform, secondly, selling smart applications or dashboards built on the smart city services or use cases deployed, and finally, providing an integrated unified control centre service to municipalities or to public entities.

“Singapore has been a very successful model for building smart cities, but Dubai is building on, and adding to that model with SmartDubai. du is engaged as the strategic partner to SmartDubai, and building the pulse platform (PPP model). Orange Business Services is working with Du as a strategic partner for delivering complex smart district projects using the MSI framework,” said Shanaah.

Riverbed believes that Smart Living, a government initiative to make homes more connected and smarter, should be the driving purpose behind smart cities, which are really a telco application.

“In fact, with all the demographic changes we are seeing across the world, Smart Living is becoming a necessity. Today, 50% of the global population lives in cities and by 2050 it is expected to reach 70%. With urban populations increasing exponentially, it is vital that cities get smart,” said Khneisser.

Since the telcos’ role is imperative in building smart cities, it is essential for them to work closely with government entities on developing the smart city visions and leveraging big data, and the Internet of Things. Telcos also need to understand the fundamental problems governments will face while building smart cities, such as how to effectively implement these systems, and project capacity growth and needs for the future based on demographic changes.

“Governments can plan and strategise for years around these issues but when the time comes to take action, if the national infrastructure provided and managed by telcos is not up to the maturity level needed, nothing will move forward and smart cities can instead become a burden to the population as performance degradation plagues the essential services. The whole purpose of the smart city- which is to provide citizens with a better quality of life- will then be defeated,” said Khneisser.

While smart cities are just emerging as the buzzword of the 21st century, the smart city space is already very crowded, active and fragmented - with big ICT vendors and start-ups in competition - but telcos are very well positioned to play the orchestration role in this situation.

“Telcos bring some unique attributes to smart city projects. Telcos build things to operate and so ‘operating’ is in the DNA. We believe in the transformative impact of digital technologies [such as IoT, LPWAN, 5G, Cloud, Big Data, AI, and Blockchain], and their capacity to help build better and more efficient and sustainable cities whilst improving the quality of life for citizens and visitors,” said Shanaah. “We can see very clearly that Dubai is distinctive in its ambition and breadth of vision, openness to new ideas, depth of commitment and pure scale – a unique digital transformation on the city scale/level.”

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